
The Baby Steps plan by Dave Ramsey is a step-by-step guide to transform your finances. Using the Dave Ramsey philosophy, followers will learn how to save for emergencies, get out of debt, build savings, become mortgage free and eventually go on to build wealth and give.
While the Baby Steps are simple to follow, they are specific to people based in the US. If you are based in the UK, you might be wondering how to adapt Dave Ramsey’s Baby Steps so that you can follow them.
This post will break down the Baby Steps and adapt them one-by-one for UK followers.
Dave Ramsey’s Baby Steps
Let’s begin with a reminder of what Dave Ramsey’s Baby Steps are.

How do the Baby Steps apply to me as a UK follower? And why do we need a UK version of the Baby Steps?
Broken down simply, the plan is to save a small emergency fund, then tackle debt. Once you have paid off your debt, move on to saving, overpaying the mortgage, saving for the future, building wealth and giving.
This easy plan can therefore be followed by anyone, and you do not have to be US-based to find value in it. However, there are certain things within Dave Ramsey’s plan that do not ‘fit’ a UK approach, which I will go into below.
There are also specifics within the plan that don’t translate well for the Dave Ramsey UK base, such as saving a $1000 emergency fund. That $1000 figure is arbitrary, not only just for UK followers, but for anyone. Your emergencies may cost more or less than $1000, based on your circumstances. So this UK version of the Baby Steps will address that.
If the Baby Steps are adapted for UK users, will it work?
I found Dave Ramsey’s Baby Steps less than three years ago, and in that time, it’s helped me to:
–Pay off my full consumer debt of £16,000 in less than one year
-Prioritise savings, helping me to save over £4000 in a matter of months
-Become £1,000 per month better off than when I started
So it pays to adapt the plan to suit your circumstances!
Will following this UK version of the Baby Steps help me to get out of debt?
The million dollar- or should I say pound- question!
Use the Baby Steps as a guide, but you will need a plan when tackling each one individually. For example, the steps really helped me to structure the order in which I tackled my financial goals. How I achieved each goal, such as paying off debt or saving, really came down to putting together my own plan.
By far, my plan for getting out of debt is the most effective.
As I said above, it enabled me to pay off my full debt of £16,000 in less than one year. That’s £410 every month in debt repayments I didn’t need to make because I was no longer in debt.
People were so interested in my strategy that I turned it into a guide that anyone can follow to get out of debt. Currently, hundreds of people are using it to overpay thousands in debt every month.
You can purchase my guide to get out of debt here, or get it for free on Kindle Unlimited. You can sign up for a free trial here, but don’t forget to set a reminder to cancel if you do not want to be charged.
So if you want to know how to structure the way you fix your finances, the Baby Steps are the best overview you can get. For more in-depth help on how to tackle each step, do your research.
The Baby Steps by Dave Ramsey UK Version
So let’s delve into the UK version of the Baby Steps.

Step 1- Save one months expenses as a starter emergency fund
Why one months expenses? Because $1000, or the UK equivalent, isn’t specific to your circumstances. Your expenses are.
One month’s salary as an emergency fund is sufficient as a financial cushion when paying off debt. It also isn’t so large that you are tempted to dip into it.
Step 2- Pay off all debt (excluding your home). Use EITHER the debt snowball or work from highest APR to lowest.
The reason I include a choice of how you tackle your debts is that, for UK followers, we tend to tackle our debts from highest APR to lowest. Why?
Because it makes financial sense to do so. You’ll save a lot of money in the long run.
For example, let’s say your debts are a large car loan at 10% APR, and a small finance deal for a sofa at 0%. You’ll save a ton of money in interest by tackling your debts from highest APR to lowest.
Using the debt snowball in this case means you’ll be throwing a lot of money at a 0% interest debt while the 10% interest debt racks up more and more interest. Crazy, right?
So why does Dave recommend the debt snowball method, where you tackle debts from smallest to largest?
Because it’s so motivating when you pay off a debt in full. It helps you to gather traction and keep paying off more debt.
So you see, you should consider both methods- the one that makes financial sense, or the one that keeps you motivated. Whichever you pick is up to you.
Step 3- Save 3 months expenses in an emergency fund
Dave’s guidance to save 3-6 months expenses can be adapted for UK followers so that you will only need to save 3 months expenses. Why?
It’s highly unlikely that you’ll need 6 months’ expenses before moving on to the next steps of the plan. For those living in the UK, we can move on to other financial goals without the need to have half-a-year’s expenses built up in a savings account. You can continue to keep saving as you tackle steps 4, 5, 6 & 7.
Step 4- Max out your pension contributions
Once you have no debt and a decent savings fund in place, you should take advantage of your employer’s pension scheme, if applicable.
Many employers in the UK offer to match your pension contributions, so this is a great opportunity to maximise your money. For more information on pensions, here’s a detailed look at pensions from MoneySavingExpert.
I’m asked on Instagram a lot if you should contribute to your pension while tackling debt and savings. My personal opinion? Saving for retirement is important, so pay what you can. After you are debt free, increase your contributions. Once you have savings in place, contribute as much as you can.
Step 5- Create sinking funds
Dave Ramsey’s Baby Step 5 focuses on saving for your children’s college tuition.
The reason Dave’s advice doesn’t translate well here for UK followers is that university loans are set up differently in the UK to the US. Student loans are not repaid in the same way. If you child doesn’t earn over a required threshold during their working life, they might never need to repay their student loans.
So rather than focusing on saving for your children’s college funds as in the Dave Ramsey version of the Baby Steps, I suggest creating broader sinking funds.
A sinking fund is a savings pot for expenses. You’ll already have sinking funds for things like holidays and one-off expenses.
While building savings and paying off debt, you’ll have a few sinking funds in place for Christmas, annual insurance payments, and other one-offs. The payments you make, and the sinking funds you have, are likely to be minimal as you focus on other financial goals.
But once you are debt free and have savings, here’s my advice:
Go sinking fund crazy!
That’s right. I said it.
Now that I’m debt free and have savings, I budget for lots of sinking funds.
I have sinking funds to pay all my insurances annually, which means I get discounts on them.
Christmas and birthdays are covered from a sinking fund, meaning their cost is spread out over the year.
We have a holiday sinking fund, so we know for sure that we can afford one every year.
I’ve even set up sinking funds to pay costs- that are usually paid for monthly- on an annual basis, like my Netflix subscription and TV licence. Why? Because if you are like me and trying to minimise your monthly expenses to cope with a temporary drop in income while on maternity pay, you’ll know that every cost adds up.
So once you’re debt free and have savings, sinking funds will help you to manage your budget. They will also give you a better quality of life by saving for the things that matter.
Step 6- Pay off your home early
While you are creating sinking funds and maximising your pension contributions, it’s time to overpay your mortgage.
Use this mortgage overpayment calculator by MoneySupermarket to see how much you’ll save by overpaying. It will blow your mind!
For example, overpaying my mortgage by £50 per month will shave nearly 5 years off the term and will save over £17,000 in interest.
So overpaying your mortgage is a wise financial decision. You’ll save a fortune in the long run.
Step 7- Build wealth and give
I’m with Dave on this one. With no debt, savings, sinking funds, and overpaying the mortgage, you’ve set yourself up to build wealth and give. How you do that is up to you, but it’s really rewarding knowing that your hard financial work enables you to help others.
Some of the stuff we’ve done this year? Bought coffee for strangers, funded food parcels for the local community, delivered gifts for NHS staff. It’s been a wonderful experience to give back. That’s what happens when you get out of debt and start building wealth!

So this is my UK version of Dave Ramsey’s Baby Steps plan. Let me know in the comments what step you are on, and how you are tackling your journey.
Enjoyed this blog? Read this related post: Eleven Things I STOPPED Doing to Pay off Debt
Great article, I especially liked your approach to budgeting, and the option to pay off debt using the avalanche method will certainly make more sense to some.
The advice for overpaying your mortgage is excellent, and you don’t even need to follow the Baby Steps for it to make a real difference to your life! I’ll definitely be looking at the calculator tool you recommended over the next few months, and encourage friends and family to do the same. I’m sure most people could find the extra £…
I am on Step 3 myself, and think it’s Step 4 that stands out as needing some UK-translation.
With Baby Step 4, Dave Ramsey & co focus primarily on the 401k and Roth IRA as tax-efficient vehicles for retirement savings, whereas we have work-based pensions and ISA’s as equivalents in the UK.
These are tax-wrappers that operate in two different ways with your money:
– 401k and work-based pension contributions are, for the most part, not taxed up front. Instead, you are liable to pay taxes on your pension in the future, when you start to receive the payments as part of your income.
– A Roth IRA is broadly equivalent to a UK ISA (cash/shares/lifetime). These are accounts that have tax-paid money placed into them, and then offer tax-free growth and tax-free withdrawals at a later date.
Chris Hogan, a Ramsey personality, has previously recommended that when looking to invest for the future, you should first get the most out of your employer match (using 401k), before making use of the Roth IRA allowance (around $6000), and then return to the 401k with any remaining funds.
For UK residents, this might translate as maxing the match on your work-based pension (as stated in your article), before placing the remainder of the 15% into a Stocks and Shares ISA; This money can then benefit from the effects of market growth and compound interest just like your pension, but without the future profits being subject to taxes, including CGT (Just bear in mind that higher rate taxpayers, may have a bit more of a balancing act with how to distribute funds most efficiently after the £50k-ish income threshold).
As for Step 5, I certainly think we can start to view higher education in England, Wales and Northern Ireland as being similar to the US in many ways. Government-backed loans delivered via SLC have simply raised the tuition fees of most universities to the point where your child will probably leave undergraduate study with around £50k+ of debt (inclusive of maintenance loans).
And while they may not be required to start repayments immediately, this debt will still accrue interest for every year that they hold it, and potentially affect their ability to respond to opportunities later in life. I really do not want my children’s decision making to be framed with the burden of debt if I can help it.
So I am currently planning to stick to Step 5 and save, although if I am successful in promoting other cost-effective avenues to higher education such as: apprenticeships, foreign study or military service; the money could just become a child ‘start-up’ fund instead – perhaps helping to secure their first home or business venture.
Anyway great content, thanks for sharing. I hope your ebook does well.
K.
Hi Karl, thanks for this. You have some great insights, and I particularly liked your point about the child start up fund. Thank you so much for your comment, it was very thought-provoking. Good luck with completion of BS3.